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Beijing Quietly Issued 'Buy Chinese' Procurement Guidelines For Hospitals & State Companies 

Tyler Durden's Photo
by Tyler Durden
Monday, Aug 02, 2021 - 08:20 PM

China may be preparing to unleash its own "buy Chinese" policy in contradiction to prior agreements when it joined the World Trade Organization in 2001. The government is believed to have been signaling the erection of new significant trade barriers with the United States based on 'unofficial' procurement guidelines yet to be made public, as Reuters reports Monday:

China's government quietly issued new procurement guidelines in May that require up to 100% local content on hundreds of items including X-ray machines and magnetic resonance imaging equipment, erecting fresh barriers for foreign suppliers, three U.S.-based sources told Reuters.

A respirator at the factory of Shenyang RMS Medical Tech Co., Ltd in Shenyang, via Xinhua

Though not yet acknowledged publicly by Beijing, the sources say the document issued by the Chinese Ministry of Finance and the Ministry of Industry and Information Technology (MIIT) under the title "Auditing guidelines for government procurement of imported products," has been circulated to Chinese hospitals and state companies laying out "local content" requirements of 25% to up 100% for over 300 items ranging from testing machinery to radar equipment to geological equipment, according to the report.

There's been other signs that the policy is being implemented, raising the stakes further for Presidents Biden and Xi Jinping's upcoming meeting in October on the sidelines of the G20 in Rome. Reuters continues: 

Doug Barry, spokesman for the U.S. China Business Council, said his group has heard about the document, but has not seen a copy. The group's members who operate in China are reporting new problems in competing for and winning bids there, including areas such as testing equipment and transportation, he said.

And here's more details from the 'secretive' document seen by Reuters' sources

The new guidelines affect a wide range of goods, including medical devices, which Beijing agreed to buy more of under the terms of the Phase 1 trade deal. For example, magnetic resonance imaging equipment - a key export for U.S. companies in the past - would face a 100% local content requirements under the new guidelines, the former official said.

U.S. trade experts said China's local content rules differed from planned increases in U.S. "Buy American" thresholds because they were not publicly released, and affect far greater volumes of medical equipment and other goods since China's state-owned enterprises include hospitals and other entities.

This could have devastating impact on US medical device exports from major brands like Johnson & Johnson, GE and Abbott - all who sell billions of dollars in equipment to China. 

Reuters notes further that "China imported some $124 billion in goods from the United States in 2020, much of which was purchased by vast state-owned and government-associated companies that control the education, health, transportation, agriculture and energy sectors."

You will find more infographics at Statista

And more: "With three-fourths of the deal now complete, China is on pace to buy just over 60% of the goods needed to reach its target, according to Chad Bown, a fellow at the Peterson Institute for International Economics."

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